Small Business and Mid-Market is NOT Easier Than Enterprise

It's a widely held misconception that targeting small and mid-market sectors is inherently 'easier' than engaging with enterprise clients.

This overlooks the grave importance of the fact that they are two radically different motions that counterplay one another:
1. marketing-led and requires high-volume (often seen down-market)
2. sales-led and requires high-priced engagements (often seen up-market)

It's fair to suggest that organizations must decide whether they are marketing-led (and sales-supported) OR sales-led (and marketing-supported); seldom can both motions lead simultaneously.

Let me explain …

Small Business: Easy Come, Easy Go

In this sector, the user and the buyer are often the same, facilitating rapid sales cycles and product feedback.

However, small businesses require a high-volume motion due to their smaller budgets (usually < $10K/year). This approach demands an 'unfair advantage' in a marketing tactic, word-of-mouth, community access, etc.

The product is scrutinized the most in this segment when the user and buyer are the same; they tend to be far less forgiving.

Small businesses often exhibit less consistency compared to up-market companies, a fact that's frequently overlooked. Their smaller team sizes typically lead to fewer rules, processes, and structures (i.e., wild, wild west). Additionally, business owners optimize for various motivations, lifestyles, and structures (i.e., family-operated — TO— search-fund run), creating a more diverse environment.

Thus, identifying repeatable market themes and insights is the most challenging here.

Additionally (and most obviously), this sector's high churn rate, driven by cash flow volatility and business closures, makes it the most unpredictable.

It's worth noting that serving venture-backed startups differs slightly from serving typical small businesses. They have somewhat clearer milestones, growth/speed incentives, and 'timelines', but certainly similar churn challenges.

Mid-Market: The Messy Middle

In the mid-market, the user and the buyer are often one to three steps removed.

Spend enough time in the mid-market, and you'll realize that determining whether your approach leans more towards small businesses or enterprises is critical to identifying the best GTM motion.

For example, sales cycles can vary widely from ~60 days to 6+ months, as do contract values, $15K-$50K.

Mid-market companies often operate with more limited expansion budgets, fewer technical resources (which are often outsourced - again depending on company size), and less defined clarity on roles and responsibilities, making it harder to navigate than in small businesses or enterprises (i.e., the bookends).

In short, the mid-market is an amalgamation and is often best approached by unbundling and dividing the group into two distinct buckets — (1) upper-end of small business OR (2) lower-end enterprise.

Many people nickname the mid-market 'Valley of Death' because early-stage founders get caught between two very different, competing games of serving $10K customers and $100,000 customers, fracturing their commercial and future product capabilities. The only way to be great is to pick one lane and motion and maintain extreme focus.

Enterprise: Timeline Conflict If Not Contained

There are several layers — i.e., 3+ roles between the user and the buyer in the enterprise segment, which complicates the sales process if you don’t go directly in at the right level.

The best way to land is to define a single business unit and use case confined within that business unit/team as a focus — versus — straddling multi-teams/decision-makers.

Enterprises promise high initial deal values ($75K—$200K) and substantial $MM expansion opportunities by around year ~3, making the effort YoY very much worth it!

Their well-established brand names lend social credibility that expedites the sales cycle with solid references, and their tolerance for ‘slight’ product imperfections (to a certain extent) allows for more time to sort and nail. Note that these imperfections are often balanced by the value they receive outside the product in services, etc.

‘Reference selling’ is the scaleable motion for these behemoths: (1) internally to unlock new business units, use cases, etc., and (2) externally to unlock net new logos.

In short, enterprise is the most predictable segment as they operate with more herd mentality (follow the market leader) and the most consistency re: team structure.

Of course, the lengthy buying process compared to small businesses can conflict with the fast-paced experimentation characteristic of early-stage startups. However, a lengthy sales cycle is often tied to selling into (1) a highly complex, regulated organization (in your control) — OR — (2) pushing a product when they have yet to define a strategy/process — hint: service-led can shorten this;)

In Conclusion

Whether targeting small business, mid-market, or enterprise, it's imperative to acknowledge and address each segment's dynamics.

Success requires you to master one of the distinct go-to-market games of (1) high-volume OR (2) high-priced contracts and decide which is best for you, your market skills, and the product you've built.

For small businesses, the game revolves around unlocking high-volume and truly unique marketing skills.

For the mid-market, you're more or less straddling two games, which is not ideal, but it is crucial to determine where the pull falls on the spectrum. Are they a closer fit with higher-end small businesses — OR — lean more towards lower-end enterprises?

For enterprises, the emphasis is on sales-led & tight project management to unlock $MM expansion by around year 3.

Startups must initially focus on either high-volume OR high-priced contracts to grow at the necessary venture speed.